Our columnist Nicola Evans, a senior associate at law firm Bircham Dyson Bell, looks at Lord Hodgson's plans to reduce bureaucracy for the sector
The red tape taskforce led by Lord Hodgson published its report, Unshackling Good Neighbours, in May. It suggested ways to reduce the bureaucratic burden on small organisations, particularly in the charitable, voluntary and social enterprise sectors, in areas such as health and safety, employment and data protection.
Of the six key recommendations in the report, the first and perhaps most important is to clarify the law on charity and volunteer liability: the fear of litigation is seen as a major barrier to people volunteering their time. The report recommends that the Attorney-General make a reference to the charity tribunal to consider volunteer liability and the possibility of establishing a 'reasonableness test' for voluntary activity.
The Attorney-General could, in principle, do this, but it is not clear whether he will and, as the report notes, any determination would not bind the courts. For this reason, it is also recommended that the Law Commission consider whether statutory changes could usefully be made. This could be done in the context of the review of the Charities Act 2006, due to start later this year, by inserting a new provision in the act, although doubts are being expressed over whether parliamentary time will be available to implement proposed changes to the act.
The report recommends simplifying the whole regime for regulating fundraising events and public charitable collections. This is also to be considered in the review of the Charities Act 2006, but achieving a balance between practical simplicity and adequate regulatory control, with restricted public finances, will be challenging. It is helpful, however, that this coincides with other reviews, notably Lord Young's health and safety review, thereby raising the possibility of some joined-up thinking, which has not been too apparent in the development of the regulatory regime so far.
In terms of social investment, the report recommends making it clear that charity trustees can engage in mixed-purpose investment, to obtain a social as well as a financial return. There can be doubt here because it requires the exercise of both a power of investment, in so far as funds are applied for a financial return, and the power to apply funds in pursuit of the charity's purposes, in respect of the expected social return.
The report also recommends the creation of a new category of 'social investor' to remove some of the hurdles that deter charities and social enterprises from offering social investment opportunities to the public. The idea is that some rules under the Financial Services and Markets Act 2000 would be relaxed for investors for whom a social return is as important as a financial one.
A recommendation likely to strike a chord with the sector is that regulatory duplication should be eliminated, in particular where the same information is required in different formats by different regulators, such as Companies House and the Charity Commission. The report says it should be possible to devise one form acceptable for multiple uses, including commissioning, where the cost of providing tender documentation can be out of proportion to the value of the contract.
Lord Hodgson's taskforce found commissioning the most challenging area. It is worth £12.8bn to the sector but, with thousands of commissioners across central and local government, achieving reform here is not straightforward. Sensible recommendations are made, such as encouraging greater communication and a better understanding between officials and the sector, and limiting tendering and monitoring costs, but realising these will require a sea change across government at central and local level and, in some cases, at prime contractor level.
The report is a positive step towards addressing unnecessary bureaucracy. The taskforce has worked to devise recommendations that are achievable; it is now down to finding parliamentary time and maintaining political will. It will be interesting to see what has been achieved in a year's time, when Lord Hodgson will report back on the progress made.
Nicola Evans is a senior associate, Bircham Dyson Bell